Foreign Buyers Represent $153B in U.S. Real Estate
The United States real estate markets have shown tight inventory challenges along with prices that have continued to climb. However, this hasn’t barred any foreign buyers from dropping a record amount of money on our properties.
Foreign buyers purchased $153 billion worth of existing homes in the United States from Q2 of 2016 through Q1 of 2017. This was up 49% from the same period from the year before according to a survey from the National Association of Realtors. Specifically, 284,455 properties were bought at a 32% increase from the previous year.
“The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases,” Lawrence Yun, NAR’s chief economist, said in a statement. “Foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work, and invest.”
NAR surveyed 6,000 Realtors last season for the report. Foreign buyers were defined as those who are not living in the U.S. as well as recent immigrants who have been in the country for less than 2 years or have been here on a visa for a minimum of 6 months. Nonresidents comprised 42% of sales with recent immigrants holding the 58% balance. All sales were existing homes, not newly built properties.
So who is spending their cash on U.S. soil? Chinese buyers continued to spend the most for the 4th year in a row at $31.7 billion. They were followed by Canadians now at $19 billion which was double from last year. This is because comparatively, the United States is a great deal for Canadians.
“Prices in Canada have been increasing at a really rapid pace,” says Danielle Hale, NAR’s managing director of housing research. “That makes the United States an attractive alternative for Canadian buyers, especially those folks who live in border cities.”
Remaining top foreign buyers were from the UK, Mexico and India completing the top 5. But where are these buyers focused on purchasing property? Maybe not where everyone thinks. New York wasn’t even in the top 5 for foreign buyers. Instead, right here in Florida topped the list with 22% of the sales. This was followed by California, Texas, New Jersey and Arizona.
“Vacation buyers typically look for warmer locations with affordable prices,” says Hale. “Florida and Arizona are both states where they find that.” They also are interested in purchasing in locations that are prime and near local attractions.
In addition, markets like New York are more expensive with returns that are slimming as a result. These buyers are spending more on their properties than Americans with 72% of buyers living abroad paying cash while 35% of immigrants living in America pay cash.
Today the United States is one of the few modern countries that is showing to be a positive investment. Despite inventory and pricing challenges, the U.S. economy is still performing well making it a viable investment.